THE NUMBERS: Number of exporting companies in the U.S. –
* Last year available
WHAT THEY MEAN:
Three ways to look at the WTO’s “Trade Facilitation” agreement, completed last Friday at the group’s Ministerial conference in Bali:
(1) In a legal sense, it is 27 pages of text stocked with requirements for customs and inspection agencies. Main features include required publication of regulations and fees; appeal-and-comment rights when new regulations are introduced; mandatory Internet availability of documents and payment options; special procedures for expedited release of air cargo and perishable goods; transit guarantees for cargoes from land-locked countries through neighboring countries to seaports without special fees; and technical help for low-income countries in putting reforms of these sorts into place.
(2) In diplomatic terms, the agreement is something of a milestone for the WTO. It is –
(a) The first WTO agreement of any sort since 1998, ending the longest gap between trade agreements since the Second World War.
(b) The first fully ‘multilateral’ agreement since the WTO’s creation in 1995. (Meaning by ‘multilateral’ an agreement which applies to all160 WTO members. The three previous WTO agreements, respectively covering information technology tariffs, basic telecommunications services, and financial services, were done between 1996 and 1998 and apply to about 80 members each. The 1998 ‘moratorium’ on applying tariffs to electronic transmissions is still technically a temporary measure.)
(c) The most widely applied trade agreement ever, with today’s 160 WTO members (counting new member Yemen) home to 93 percent of world population and the origin of 97.5 percent of world exports.
(3) In practice, the agreement’s real-world reshaping of customs is likely to be valuable for growth in general, and especially useful for small business exporters. ‘Macro’ estimates of the value of trade facilitation are startlingly large. For example, a computer model done by the World Bank and World Economic Reform last spring found that bringing countries halfway to ‘best practices’ in trade facilitation – including improved telecommunications and road transport, as well as the customs and regulatory-transparency issues covered in the agreement – would add 4.7 percent to world GDP, which is nearly six times the estimate for full tariff elimination.
Much of this growth should come from small businesses. Technological advance is already encouraging them to export, as search engines and on-line market places make it cheaper to find overseas customers, and express delivery services make small deliveries faster and cheaper. Worldwide, a survey by Geneva’s International Trade found 55 percent of small-business respondents agreeing that it is steadily easier for them to export; eBay’s 2012 Online Marketplace report found 97 percent of the auction site’s commercial sellers exporting; and in the United States, annual reports by the Bureau of Economic Analysis finds net gain of about 2.000 very small exporting businesses (with fewer than 20 employees) a year over the last decade, and 3500 a year since the financial crisis. Even with friendlier technologies and shippers, though, smaller businesses still have less time and money to devote to finding forms, puzzling out unpublished regulations, and dealing with shipment holds and rejections than do their larger cousins. Thus they continue to find trade more expensive than do larger firms with overseas offices and legal staff, and their share of exports remains relatively small. The agreement’s main provisions – ensuring simple and clear access to overseas documents and regulations, encouraging express delivery and air cargo, and requiring clear procedures for cargo holdups and releases – are likely to help them most.
The agreement –
The WTO’s Trade Facilitation Agreement: https://mc9.wto.org/draft-bali-ministerial-declaration#trade_facilitation
Comment from the U.S. Trade Representative office: http://www.ustr.gov/about-us/press-office/fact-sheets/2013/December/WTO-Trade-Facilitation-Agreement
ProgressiveEconomy Director Ed Gresser, in “Trade Facilitation as Growth Tool” last June, looks at the WTO and at ways the U.S. itself can do better: http://progressive-economy.org/2013/07/16/trade-facilitation-as-growth-tool/
In Enabling Trade, the World Bank and World Economic Forum estimate the additional growth and exports available from trade facilitation: http://reports.weforum.org/global-enabling-trade-2013/
Trade and the small business –
Intracen surveys small businesses worldwide on export success and the most useful reforms: http://www.intracen.org/news/itc-survey-small-business-exporters-report-improvements-in-business-environment-expect-exports-to-rise/
And eBay examines its American small-business exporters: http://www.ebaymainstreet.com/sites/default/files/EBAY_US-Marketplace_FINAL.pdf
How many small business exporters are there? How fast are they growing? The basics come from a report published each April by the Bureau of Economic Analysis, which is are available at: http://www.census.gov/foreign-trade/aip/index.html#profile
The reports offer a few ways to look at this:
1. BEA’s count of very small exporters (with fewer than 20 employees) was 94,171 in 2001, 101,714 in 2006, 107,482 in 2009, and 114, 468 in 2011. This is a gain of about 2,000 exporters annually over the decade, and 3500 a year in 2010 and 2011. Their share of exports remains small, but has grown from 7.0 percent to 7.8 percent.
2. BEA’s releases also have counts for businesses with 20-49 employees, and for businesses not reporting total employment. Assuming that the latter group (which is very big, at 117,646 in 2011) is also mainly small employers, the totals would be 195,000 small exporters in 2001, 210,000 in 2006, 237,000 in 2009, and 264,000 in 2011. In this count, the net annual gain of small exporters is a bit less than 7,000 per year over the decade, and 13,500 a year in 2010 and 2011. Their combined share of exports has risen from 18.0 percent to 20.5 percent.
3. The count of large exporters has been slightly down, with 25,715 businesses employing 100 or more workers exporting in 2001, 23,114 in 2006, and 22,700 in 2011. By value they remain the major exporters, with 79 percent of sales; but their share is down from 82 percent in 2001 and 80 percent in 2006.